Italy’s President Wants a Stable Coalition. If Not, Elections
Italy’s President Enters High-Stakes Talks in Bid to End Crisis
(Bloomberg) -- President Sergio Mattarella is adamant that any coalition seeking to rule Italy must be able to hold a government together until the end of the current legislature in 2023, according to an official familiar with the discussions.
If there isn’t an alliance capable of creating a stable system for that long, then Mattarella will call for early elections, said the official, who asked not to be identified because the deliberations are private.
Mattarella, who holds the power to appoint the next prime minister, is setting a high bar for a new coalition to take shape, increasing the chance that Italy will face snap elections. The 78-year-old head of state has indicated that he would give the center-left Democrats and the anti-establishment Five Star Movement a few extra days to continue attempts to forge a tie-up and agree on a new premier.
Leader of the Democratic Party Nicola Zingaretti told Mattarella on Thursday that he’s available to form a new government, but won’t do so “at any cost,” according to remarks he made to reporters.
Building a new majority “for us isn’t an easy choice because of the heavy past that the outgoing government left and because of the distance between us and Five Star,” Zingaretti said. But we’re “concerned” by the current situation, he said.
New Elections
Italy, the euro area’s third-largest economy, was thrown into a crisis earlier this week when Prime Minister Giuseppe Conte resigned after losing support of a majority of lawmakers in Parliament, namely that of League leader and Deputy Premier Matteo Salvini. Salvini pulled his backing for the awkward coalition with Five Star in an effort to capitalize on strong poll numbers that could see the League take control in a new election.
Investors took a degree of solace in the possibility that a snap ballot could be avoided, with Italian bonds rallying for a third day. Ten-year yields dropped three basis points on Thursday to 1.31%, the lowest level since 2016. The spread over German bunds, a key gauge of risk in the nation, dropped to 196 basis points.
Mattarella is holding a round of consultations with Italy’s main political groups on Thursday -- including Five Star, the Democrats, Forza Italia, and the League -- in an effort to find a combination that could command a majority and bring a measure of stability to his troubled country.
The stakes for Italy could hardly be higher, with the country on the brink of recession and a budget that needs to be drafted this fall that must adhere to stringent European rules.
If a new coalition isn’t possible, Italy will be lurching toward new elections at the worst possible moment -- and Salvini, who is currently the most popular politician in the country, will be in pole position to take charge.
--With assistance from Chiara Albanese and Jerrold Colten.
To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Richard Bravo, Chiara Albanese
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